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Home Solar Panel ROI Calculator

Compute simple payback and 25-year return on a residential solar PV system. Models self-consumption, export tariff, panel degradation, and electricity-price inflation.

Last reviewed:

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Home solar pays back through two channels: avoided electricity imports (the kWh you generate and use directly, instead of buying from the grid) and export revenue (the kWh sent back to the grid at the feed-in tariff). The first is usually 3-5× more valuable per kWh than the second, which is why self-consumption — what % of your generation you use rather than export — is the biggest single lever in solar economics.

Enter your net system cost (after any rebates, tax credits, or grants), system size in kW, and daily generation per kW (this depends on geography — see the help text). Set your self-consumption % (50% is typical without a battery, 70-80% with one), the import price you pay the grid, and the export tariff the grid pays you. The calculator returns simple payback period and 25-year cumulative return with electricity-price inflation factored in.

Examples

6 kW system, $15k net, 50% self-consumption, US average

6 kW × 3.5 kWh/kW/day × 365 = ~7,665 kWh/year. 50% self-consumed at $0.18 = $690. 50% exported at $0.05 = $192. Year-1 savings ~$830 net of $50 maintenance. Simple payback ~12-13 years. 25-year cumulative return ~$25-30k → 70-100% ROI.

Same system + battery (70% self-consumption)

Add $7k battery → $22k net. 70% self-consumed at $0.18 = $966. 30% exported at $0.05 = $115. Year-1 savings ~$1,030 net of $50. Despite higher upfront cost, payback drops to ~12 years and 25-yr return rises substantially because more kWh hit the high import-avoidance price.

UK system, smaller, higher tariffs

4 kW × 2.7 kWh/kW/day × 365 = ~3,940 kWh/year. £8k net cost (post 0% VAT). 50% self-consumed at £0.27 = £532. 50% exported at £0.07 = £138. Year-1 net ~£620 after £50 maintenance. Payback ~13 years; 25-year cumulative ~£18-22k.

Frequently Asked Questions

Why is self-consumption so much more valuable than export?
You avoid paying the import price (typically $0.16-0.30/kWh) for every self-consumed kWh. You only get the export tariff ($0.05-0.15/kWh in most markets) for exported kWh. The spread is 3-5×, which is why batteries — which let you store midday generation and use it after sundown — improve solar ROI substantially.
What about the federal solar tax credit (US ITC)?
The ITC is 30% of gross installed cost (through 2032). Apply it to the gross price, not the net — i.e. take 30% off the contractor's quote and enter the resulting net cost. UK has 0% VAT on residential solar (effectively built into the quote). AU has STCs (Small-scale Technology Certificates) typically worth $2-3k for a residential system.
What is a realistic daily generation figure for my location?
PV-Watts (US, free) or the EU Photovoltaic Geographical Information System (EU, free) will give you site-specific numbers from your address and roof orientation. Rules of thumb: US south-west 4.5-5.5 kWh/kW/day; US north-east 3-3.5; UK 2.5-3; AU 4-5; Germany / Netherlands 2.5-2.8.
Is the calculator pessimistic?
Slightly. It uses simple payback (no discounting, ignoring opportunity cost of the upfront capital). It also doesn't include the property-value lift solar typically adds at sale (US studies suggest $4-6 per W installed). On the other hand, it assumes constant self-consumption — most households see lower self-consumption in summer (highest-generation months) and higher in winter.
How sensitive is payback to the export tariff?
Less than you might think when self-consumption is 50%+. The other 50% generates the export, but at a price 3-5× lower than import. Halving the export tariff typically extends payback by 1-2 years, not 5-10. Self-consumption % is a much bigger lever.

References

  1. PVWatts Calculator (NREL) — https://pvwatts.nrel.gov/
  2. EU PVGIS (Photovoltaic Geographical Information System) — https://re.jrc.ec.europa.eu/pvg_tools/en/
  3. NREL — Levelized Cost of Solar Photovoltaics methodology — https://www.nrel.gov/analysis/tech-lcoe.html
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Quick Tips

Double check your inputs. Ensure units match (e.g., inches vs cm).

Did you know?
Calculators are estimates. Consult professionals for critical decisions.

Home solar pays back through two channels: avoided electricity imports (the kWh you generate and use directly, instead of buying from the grid) and export revenue (the kWh sent back to the grid at the feed-in tariff). The first is usually 3-5× more valuable per kWh than the second, which is why self-consumption — what % of your generation you use rather than export — is the biggest single lever in solar economics.

How to Use This Calculator

Enter your net system cost (after any rebates, tax credits, or grants), system size in kW, and daily generation per kW (this depends on geography — see the help text). Set your self-consumption % (50% is typical without a battery, 70-80% with one), the import price you pay the grid, and the export tariff the grid pays you. The calculator returns simple payback period and 25-year cumulative return with electricity-price inflation factored in.

Understanding the Formula

Year-1 savings = (generation × self-consumption% × import price) + (generation × (1 − self-consumption%) × export price) − annual maintenance. Year-N savings inflate at the electricity-price inflation rate and degrade at the panel-degradation rate. Simple payback = the year at which cumulative savings first reach the net system cost.

Examples

6 kW system, $15k net, 50% self-consumption, US average

6 kW × 3.5 kWh/kW/day × 365 = ~7,665 kWh/year. 50% self-consumed at $0.18 = $690. 50% exported at $0.05 = $192. Year-1 savings ~$830 net of $50 maintenance. Simple payback ~12-13 years. 25-year cumulative return ~$25-30k → 70-100% ROI.

Same system + battery (70% self-consumption)

Add $7k battery → $22k net. 70% self-consumed at $0.18 = $966. 30% exported at $0.05 = $115. Year-1 savings ~$1,030 net of $50. Despite higher upfront cost, payback drops to ~12 years and 25-yr return rises substantially because more kWh hit the high import-avoidance price.

UK system, smaller, higher tariffs

4 kW × 2.7 kWh/kW/day × 365 = ~3,940 kWh/year. £8k net cost (post 0% VAT). 50% self-consumed at £0.27 = £532. 50% exported at £0.07 = £138. Year-1 net ~£620 after £50 maintenance. Payback ~13 years; 25-year cumulative ~£18-22k.

Frequently Asked Questions

Why is self-consumption so much more valuable than export?

You avoid paying the import price (typically $0.16-0.30/kWh) for every self-consumed kWh. You only get the export tariff ($0.05-0.15/kWh in most markets) for exported kWh. The spread is 3-5×, which is why batteries — which let you store midday generation and use it after sundown — improve solar ROI substantially.

What about the federal solar tax credit (US ITC)?

The ITC is 30% of gross installed cost (through 2032). Apply it to the gross price, not the net — i.e. take 30% off the contractor's quote and enter the resulting net cost. UK has 0% VAT on residential solar (effectively built into the quote). AU has STCs (Small-scale Technology Certificates) typically worth $2-3k for a residential system.

What is a realistic daily generation figure for my location?

PV-Watts (US, free) or the EU Photovoltaic Geographical Information System (EU, free) will give you site-specific numbers from your address and roof orientation. Rules of thumb: US south-west 4.5-5.5 kWh/kW/day; US north-east 3-3.5; UK 2.5-3; AU 4-5; Germany / Netherlands 2.5-2.8.

Is the calculator pessimistic?

Slightly. It uses simple payback (no discounting, ignoring opportunity cost of the upfront capital). It also doesn't include the property-value lift solar typically adds at sale (US studies suggest $4-6 per W installed). On the other hand, it assumes constant self-consumption — most households see lower self-consumption in summer (highest-generation months) and higher in winter.

How sensitive is payback to the export tariff?

Less than you might think when self-consumption is 50%+. The other 50% generates the export, but at a price 3-5× lower than import. Halving the export tariff typically extends payback by 1-2 years, not 5-10. Self-consumption % is a much bigger lever.

Assumptions & Limitations

  • Self-consumption % is constant. In reality it depends on usage patterns relative to generation curve — installing a battery or shifting big loads (EV charging, dishwasher, laundry) to daytime can lift it from 30% to 70%+.
  • Daily generation kWh/kW is an annual average. Real generation peaks May-August in the northern hemisphere (October-February in the south); winter output is half or less of summer.
  • Export tariff is fixed for the horizon. UK SEG, AU FiT, and US net-metering all evolve over time and can fall — sensitivity-test by halving the input.
  • Battery is not modeled separately. Adding a battery raises self-consumption % (which the calculator captures) but adds capital cost not in this calculator. For a battery scenario, increase systemCostNet by the battery price and the self-consumption % together.
  • No degradation in import or export tariffs. The calculator inflates them at the same rate as electricity inflation, but real tariff structures (TOU, rising fixed charges) can change the relative value of generated kWh.
  • No discounting / NPV — this is a simple cumulative payback, not a discounted-cash-flow analysis. For NPV, divide each year-N savings by (1+discount rate)^N before summing.

References

  1. PVWatts Calculator (NREL) — https://pvwatts.nrel.gov/
  2. EU PVGIS (Photovoltaic Geographical Information System) — https://re.jrc.ec.europa.eu/pvg_tools/en/
  3. NREL — Levelized Cost of Solar Photovoltaics methodology — https://www.nrel.gov/analysis/tech-lcoe.html